Skip to comments.Would Prop. 30 really drive millionaires out of California?
Posted on 10/29/2012 6:20:18 AM PDT by SeekAndFind
A counterpart to the biblical adage that the poor will always be with us is the notion that the rich will always be one tax hike away from leaving us.
That's the foundation stone, after all, of the argument against raising taxes on "job creators" and of bestowing preferential treatment on capital gains (largely collected by the rich) over wage income (the sustenance of us other poor slobs).
And it's a linchpin of the campaign against Proposition 30, Gov. Jerry Brown's proposal to raise income taxes on income above $250,000, topping out at a 13.3% rate on income over $1 million. Go after the wealthy like that, the argument goes, and the rich will flow out of the state like rainwater cascading down a sewer grate.
It's refreshing, therefore, to see some hard data on the issue, and illuminating to learn what it tells us, which is: Not so.
The data came from the California franchise tax board and was crunched by two Stanford sociologists at the request of Board of Equalization member Betty Yee. Their main goal was to determine if the last big California tax hike on millionaires, the mental health surcharge of 2005, had a detectable effect on the out-migration of those who paid it. (The surcharge added one percentage point to the tax rate of incomes over $1 million, raising the top marginal rate to 10.3%.)
In their just-published paper the Stanford analysts, Cristobal Young and Charles Varner, also investigated whether the state's 1996 tax cut for high-income residents, which cut the top rate to 9.3% from 11%, had the opposite effect that is, lured wealthy taxpayers into the state.
(Excerpt) Read more at latimes.com ...
Millionaires? Maybe not. Perhaps they can absorb the added burden. But folks in the $250K range will leave. In the CA economy, $250 isn’t really that much.
Wow. They are delusional.
...written by Michael Hiltzik... data from two Stanford sociologists...
Do the morons at the LA Times really not understand that $250k is not a million?
Not true, I know of one who finally had enough and moved to Vegas. It’s not just a 1% problem but the fact that you’re paying 13% of your income for the privilege of living in CA. For a millionaire that’s $130,000, that’s not chump change even for the wealthy and they will move out if they can.
Completely delusional. I know a few that have already left, and that’s with the CURRENT tax rates.
Why is it the people that think raising the tax rate by 1% every year has no negative effects are the very same people that think atmospheric CO2 rising by 0.01% over 100 years will cause the total destruction of life on Earth?
Leftists are not so hot with pattern recognition.
Not too long ago, when taxes were being strongly hiked in New Jersey, the left said that it would not make high income taxpayers leave. Some 20,000 taxpayers did leave, and it cost the state economy $2.5 billion in gross income.
Hawaii, New York, Oregon and Maryland also raised rates on high earners during in the 2000s, and the left said that it would not drive out millionaires. But other than a LOT of anecdotal evidence that it did, there was no real effort by economists to document it. For some reason.
Very recently in France, hiking the tax on the rich by a huge amount, the left still insisted that it would not drive out the wealthy. It did, in a big sort of way. But the French left are still in denial about it.
So along with its crushing government over-regulation, very high prices, and nanny-statism about everywhere, the left still does not grasp the obvious. But if the people of California are smart, a good question, will they decide to put yet another nail in their economic coffin?
A few things to consider.
1. Those over 250k generally have good jobs but may not be able to re-locate because of difficulty in finding an equal or better job or because of the difficulty in selling their house w/o taking a big loss. This is job lock and housing lock.
2. Consumer spending is lower because it is displaced by higher taxes. Small business operates under smaller margins and cannot afford to expand business and hire workers. This increases unemployment, out migration and lowers government revenue.
3. The super wealthy already have multiple residences and can claim residence, with the help of their accountant, in low or no tax states.
If Romney is elected, and the overall US economy improves, the differences between the pro- business and anti-business states will become more evident. Then we could see a real exodus from CA for all those people in the productive sector.
Thanks for posting this: “Millionaires? Maybe not. Perhaps they can absorb the added burden. But folks in the $250K range will leave. In the CA economy, $250 isnt really that much.”
This is the real danger for Califonia, losing a large % of the real producers. They might become the future creators of companies like Apple, HP or other block busting companies.
If we continue to lose these real producers and their companies, California will continue to drift into becoming a third world country.
Nevada, Idaho, Arizona, Texas and Oklahoma have been welcoming these real producers when they decide to leave the downward spiral of California into being another third world state.
Hanoi Jane just sold her house in Kali (formerly owned by RR, of all people that she wouldn’t be caught with the range of an AA gun...)
In that case, we should just institute a 100% tax on all incomes in the state! We could call it the “From each according to his ability, to each according to his need” tax policy.